Tory MPs urge George Osborne to ease burden on middle earners after official
figures show those paying 40p and 45p rate will shoulder bulk of Britain's
tax bill in 2015

Higher rate taxpayers will shoulder the burden of two thirds of Britain’s entire income tax bill by the next election even though they represent just 16 per cent of the population, according to official figures.

People hit by the 40p and 45p rate will pay 67 per cent of Britain’s total tax bill by 2014/15, despite being outnumbered by lower paid workers at a rate of one to five.

The new figures, published by HMRC, will fuel the debate in the Conservative party about the need to lessen the tax burden being imposed on middle earners in their election manifesto.

Under Coalition, more than a million additional middle income earners will have been dragged into the 40p and 45p rates between 2011/12 and 2014/15 after George Osborne ignored calls to raise the threshold in his budget.

This so-called "fiscal drag" has been lucrative for the Treasury but Conservative MPs believe that it has resulted in the punishment of too many families who are already suffering from rising food and energy prices.

Mr Osborne’s decision means that by next April, 4.9 million people will be in the higher and additional rate bands, representing 16 per cent of all taxpayers. They will pay £116 billon of Britain’s £172 billion tax bill.

The figures show that their burden has increased significantly since 2011/12, when they paid 58 per cent of the nation’s tax bill and contributed a total of £91.9 billion to the exchequer.

The analysis also discloses that by 2014/15 the top 1 per cent of earners will pay 27.4 per cent of Britain’s tax bill, compared to 21.4 per cent a decade ago.

Tory MPs have warned that Mr Osborne that people who "don't consider themselves even remotely privileged or rich" including police officers, senior nurses and teachers, are being forced to pay the 40p rate.

John Redwood, a Tory backbencher, said: “Those dragged into the 40p rate are not rich people. It is wrong to impose a penalty rich person’s rate on a middle-earner and we have too many people paying the 40p rate.

“I think that cutting the top rate further will increase the amount of money that rich people pay. We can use this extra income to take people out of the 40p rate.”

In March, the Chancellor used his Budget to increase the tax-free personal allowance from £10,000 to £10,500, a change that the Treasury says benefits all workers earning up to £100,000.

He ignored calls from Tory MPs and two former Tory Chancellors, Lord Lawson and Lord Lamont, to raise the threshold for the higher rate of income tax instead.

The earnings threshold at which people start paying tax at the higher 40p rate has traditionally been increased in line with inflation to take account of rising living costs.

However, from April 2014, this threshold will rise by a flat 1 per cent for two years, significantly below the current Consumer Prices Index inflation measure of 1.6 per cent.

According to the HMRC forecast, the number of people in the 40p rate will rise from 3.5 million to 4.6 million by the time of the next election. This includes a 45 per cent rise in the number of additional rate taxpayers, from 236,000 to 343,000.

Twenty-five years ago, when the then Tory Chancellor Nigel Lawson first introduced the 40 per cent band, only one person in 20 paid the higher rate. Today, one in five people pay the 40 per cent rate.